IV Insights Blog

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As a new Congress descends on DC, the push for changes to our patent system continues. In February, despite already historic changes to the system over the past few years, Senate leaders called for more tweaks. With a new administration in town it’s a good time to review the bidding.

Let’s start with some basic facts: Patents are more than arcane legal documents; they represent a legal claim to rights in an invention. Regardless of whether you subscribe to the “patents as property” or “patents as defining a liability” theory, there is no dispute that patents are an asset – they can be bought, sold, licensed or otherwise transferred.

This fact is fundamental to the functioning of the patent system, and the notion that inventions are valuable and are worthy of investment is the core operating principle of Intellectual Ventures. This was true when my co-founder Nathan wrote a Harvard Business Review piece on the topic nearly a decade ago, and it is true today.

Over the years others have adopted IV’s principle and, as a result, a market grew up around these investments. One would think that this would be viewed as a good thing – if we agree that inventing is something to be incentivized, then a market for investing in inventions will provide additional incentives for those doing the invention and, ultimately, fund more invention.

Unfortunately, not all saw the growing market for invention rights as a positive development. Market leaders were quite happy with the status quo in which inventors had limited ability to seek recourse when their inventions were used. As the market developed, and the playing field was leveled, the market leaders developed a strategy familiar to the new administration – they developed a set of alternative facts to push the idea that the system was failing.

For example, there was much hue and cry over the alleged use of mass mailing of demand letters to end users of products alleging infringement. After extensive analysis (and expenditure of tax dollars) the FTC reached a settlement with the one (1) actual offender, who had extracted licenses from exactly two (2) small businesses.

Over the past decade these rhetorical attacks on invention rights have been endless. Common refrains include: Patent litigation is out of control! Poor quality patents are killing investment in technology and dragging down companies! Demand letters are defrauding businesses! Software shouldn’t be patentable! Trolls are abusing the International Trade Commission!

This assault on the system lead to the passage of the America Invents Act, and a further bevy of changes including several Supreme Court rulings: two encouraging judges to award attorney’s fees to the winner in patent cases, another which muddied the waters when it comes to what is even deserving of a patent, and a third that could reshape where a patent owner can assert his rights.

When Nathan Myhrvold calls something “the closest thing to magic he’s ever seen,” it warrants a second look. Metamaterials are a new frontier, one the New York Times said “the waves of the future may bend around,” and we are investing a lot of time in their success.

In this illustration, a thin diffractive lens focuses a divergent wave created by a small driver and achieves a nearly perfect focus on the other side of it. This shows how focusing can “reverse” diffraction (the spreading of waves) and instead direct wave energy towards a small receiver.

Metamaterials are engineered structures including arrays of small features that can manipulate electromagnetic, acoustic, or even water surface waves in interesting ways and well beyond what is possible with naturally occurring materials. In other words, metamaterials literally bend, squeeze and twist the waves – sound waves, light waves, radiowaves – that are all around us.

And that future is not far off. Today there are many near-term applications that metamaterials technology enables, leading to practical solutions that can positively impact the lives of millions of people around the world. In 2010, our Invention Science Fund laid out a plan to pursue practical applications of metamaterials, and one-by-one we have systematically created, incubated and ultimately spun-out new companies empowered to develop and bring these new products to market.

Today, four new companies are hard at work, exploiting ISF’s metamaterial invention leadership to create new classes of products. Kymeta is bringing to market a radically new kind of flat satellite antenna for high-speed mobile and other applications. Evolv Technologies, which was formed in collaboration with Duke University, is pioneering advanced security and other imaging technology. Echodyne is building new kinds of scanning radar, such as for drones and self-driving cars. And, finally, Pivotal Communications is creating new kinds of advanced communications antenna solutions, including those essential to delivering the promise of super-fast “5G” of cellular services.

ISF is hard at work on our fifth metamaterial spin-out and beyond. We can’t say too much about it right now, but what we can say is that we think it will be very practical and very powerful. The applications of metamaterials are limited only by our own imagination and we’re eager to continue sharing what’s next.

For more about how our spinouts are using metamaterials in the market, check out the latest around companies like Kymeta, Evolv, and Echodyne, and stay tuned for news about new technologies.

The FTC has released its long-awaited Patent Assertion Entity (PAE) Activity Report. It is detailed, comprehensive and quite long – almost 270 pages! I apologize for the length of this blog posting, but a report five years in the making deserves more than passing attention.

By far the most important finding of the Report – what the FTC describes as its first “Key Finding”[1] – is that not all PAEs are created equal. Instead, the FTC found that there are dramatic and significant differences between “Portfolio PAEs” such as IV, which emphasize licensing and high-value patents, and other types of litigation-oriented PAEs, which often draw criticism and negative marketplace scrutiny.

The Report is disappointing in many respects – for example, it offers legislative recommendations not supported by the evidence in the report, and it misses a key opportunity to analyze the fundamental issue of how to value the mission and impact of PAEs. But overall the in-depth analysis of the different models of PAE should provide useful insights in the ongoing discussions of patent policy.

Crucially, the Report highlights a significant flaw in virtually all prior academic studies in this field. It observes, accurately, that most prior studies of PAE activity “have focused on publicly observable litigation behavior and relied on publicly available litigation data.” And it notes that relying on only public data conceals key information that is required for a “deeper understanding of PAE business models,” such as “their confidential... licensing terms and data.” [2] As is noted in the study, for PAEs such as IV, which reach negotiated licensing agreements far more often than they litigate, this information is critical to any well-founded analysis of the market impacts of its business model. This Report attempts to gather that essential information and as a result is able to make a valuable contribution to the ongoing policy debate in this area.

As noted, the Report draws an important distinction, supported by extensive analysis and evidence, between two very different modes of PAEs. On the one hand, the Report recognizes what it calls “Portfolio PAEs” – firms like IV, which focus their efforts on investment, IP innovation and development, and wide-scale licensing of high-value patents to further develop significant technologies. (Indeed, the Report at various points notes the similarities between the strategies and business methods of Portfolio PAEs and those of other Non-Practicing Entities (NPEs) and of manufacturing firms). In contrast, while the Report goes out of its way to eschew the term “patent troll,”[3] it also draws a clear distinction between the methods and approach of high-value Portfolio PAEs with the strategies and approach of what the Report calls “Litigation PAEs” – PAEs that, according the findings of the Report, focus their efforts on low-value patent settlements that are generally consistent with nuisance settlements and appear driven by the interest of defendants in avoiding litigation costs. The collection of hard data and statistical evidence and the FTC analysis of the clear differences between these two very different business models is an important and compelling aspect of the Report, and it alone makes the Report worth reading.

The United States has consistently led the world in innovation with the U.S. patent system as a strong catalyst for breakthrough technology. This system has served and protected the American inventor, and has been the envy of the world for many years.

However, while the United States is still a strong global innovator, we are seeing what could be the beginning of a dramatic shift in its leadership as a nation that values and defends invention.

This April, Intellectual Ventures (IV) was invited by the U.S. Commerce Department to participate in the Hannover Messe international trade fair in Hannover, Germany. For the first time ever, the United States was the partnering nation in this event. IV took the opportunity to showcase the breadth of our company’s technology for the world. With technologies on display demonstrating advances in industrial automation and energy, the tradeshow was a testament to the fact that Europe and its patent system are moving to the forefront as leaders in encouraging and supporting inventors and promoting breakthrough technology.

Read on for a look at IV's recent “technology expo” on Capitol Hill where policy makers and staffers had the opportunity to see first-hand these breakthrough technologies.

Guests of our "technology expo" mingle and learn.

What do the following have in common?

An ultra-efficient advanced nuclear reactor,

An advanced satellite antenna that will simplify satellite connections for broadband Internet on the go,

A laser-based insect-killing zapper machine that diminishes the spread of diseases like malaria

And a vaccine storage device that the World Health Organization and the Centers for Disease Control feel could make Ebola vaccine trials in Sierra Leone and Guinea possible.

These diverse, independent and seemingly uncommon breakthrough technologies all originated at Intellectual Ventures.

On May 19, in honor of National Inventors Month, Intellectual Ventures hosted a “technology expo” featuring some of the spin-out, breakthrough technology companies whose origins started at the IV Lab and owe their existence to the unique business model that Intellectual Ventures has created.

The crowded Rayburn House Office Foyer served as host to several hundred Capitol Hill policy makers and staffers who had the opportunity to see first-hand these breakthrough technologies.

Throughout much of the history of our patent system, economists agreed that patents fueled innovation. And yet, over the past few years, proponents of patent reform have sought to call into question the value of the fundamental structure underpinning intellectual property. Now, a new study published as a part of the U.S. Patent and Trademark Office (USPTO)’s working paper series offers quantitative evidence of the undeniable benefits of patents for start-ups.

After examining the impact of patents on the success of start-ups, the three authors of the study found that patents can be vital for start-ups across a broad range of metrics:

JOBS: An approved patent increases a start-up’s employment growth by an average of 36 percent over five years.

INNOVATION: Once a patent seeker, always a patent seeker; firms with an approved first patent continue to innovate, receiving many subsequent patents of higher quality relative to other firms.

At Intellectual Ventures, we frequently discuss the importance of inventing for impact. But how do you know that an invention will actually solve the targeted problems for the people whose lives you’re looking to change? As previous interviewees, including Manan Shulka and David Bell, have discussed, the solution to a problem often takes a different direction than you first thought.

This month on News You Can Use, we’re featuring stories on clearing this hurdle and the invention methods that refine raw ideas for impactful results.

Inventions start with ideas. But turning a good idea into a great invention can be challenging, and that’s where prototyping comes in. A strong prototype allows inventors to take the theoretical to reality. And a prototype almost always reveals areas where additional improvements can strengthen an invention. Entrepreneurfeatured this fantastic article that explains the various routes inventors can take to maximize their ideas through prototyping – and invent for the greatest impact.

Last month, Senator Dick Durbin and Representative Bill Foster of Illinois introduced a bill that would fund basic science research at five federal agencies to the tune of $100 billion over the next decade, including guaranteed annual increases of 5 percent over and above inflation. Senator Durbin and Congressman Foster believe that this increased long-term funding for basic R&D is essential to keeping the U.S. competitive in the global economy. I couldn’t agree more.

But, given the hefty price tag, I think it’s important to point out that sustained government support is not just necessary for economic competitiveness. It’s also the most effective mechanism for generating the kind of deep innovation that changes our lives and the world.

This week on Behind the Breakthrough, we’re profiling Dr. Michael Manion, the director of Keon Research, a company dedicated to creating exciting and valuable inventions. Dr. Manion also serves as an Inventor & Portfolio Investment Manager at IV, where he is a consultant to the Invention Development Fund.

Dr. Manion’s impressive background in biophysics and physiology first led him to conduct groundbreaking research in cancer therapeutics, discovering new compounds from novel understandings of cell signaling. Since then, Dr. Manion has created more than 100 diverse inventions and continues to work on innovative ideas, anticipating the next big breakthrough.

The latest study purporting to shine a light on patents and the invention economy is a survey conducted by UC Berkeley’s Robin Feldman and Stanford’s Mark Lemley. We’ve been pointing out for years that sound data supporting the need for further changes to patent enforceability is lacking, so we were curious to see what these two academics might say about patent licensing and its relationship to innovation.

In their new study, professors Feldman and Lemley raise a very interesting question -- whether society benefits by providing exclusive rights to an inventor when, in many circumstances, a second inventor would likely have come up with the same invention independently.

While this is an interesting thought experiment worthy of serious academic debate, in the United States our patent system is constitutionally charged with “securing for limited times to…inventors the exclusive right to their…discoveries.” Put another way, our patent system has been designed to reward inventors by granting them the exclusive rights to their inventions.